[Brobs91]

Question stated in the first section it was considering a 600m investment in Rupees. It gave the after tax inflows in the 3rd section.

With the swap (150m RR) if I recall reduced the investment so 450m was normal capital and 150m was the swap. The swap was then an inflow on year 4 exchanged at the current spot rate as the q stated to swap it back.

Yes Buryecs was very similar and a question from June 11

[Brobs91]

Q1 – unbundling
Valuation based on net assets valuation, FFCF valuation, PE ratio valuation, dividend valuation
with some WACC, ungearing and cost of capital involved

All arrived at different values (pretty volatile)

Q2 – APV

Basecase NPV negative
APV negative

Project shouldn’t be undertaken based on it but it had strategic advantages

Q3 – hedging & foreign investment

Netting + Forward rates couldn’t be used because they had expired (3 month forwards given, receipt was in 4 months), only money markets were applicable way of hedging.

NPV without the swap negative
NPV with the swap positive

[Brobs91]

Hi John

A small question on the above.

Why is it that the $128m is attributable to shareholders?

As the company’s capital split post acquisition is debt to equity 40:60 surely only 60% of the $128m is attributable to the shareholders and the remainder to debt holders.

Thanks in advance

[Brobs91]

Hi John,

Small question regarding the bank charge in Buryecs when considering the NPV of the project.

Why is the bank charge not considered as an annual outflow each year on the swap balance ($5000m)?

I understand the book value of the swap in EUR would change on this balance year on year but I’m not certain why it isn’t included within the project appraisal

i,e for year 1 I calculate at ($5000m * 0.5) = $2500m, $2500 * 0.6 = $1500 and then $1500 conversion into EURs i.e. in Year 1 would be an outflow of $1500*0.142 = 213 EUR outflow in year 1

Thanks in advance

[Brobs91]

Yeah I totally forgot to include marketing costs from previous years in capital employed as it wasn’t mentioned in the information within the EVA segment so got a positive 700k or so 😀

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